National HealthCare (NHC) Q2 2024 earnings summary

Executive summary

• Net operating revenues and grant income rose 6.4% year-over-year for Q2 2024 and 8.3% for the first half of 2024, driven by higher per diem rates and improved census in skilled nursing facilities.

• GAAP net income attributable to stockholders was $26.8M for Q2 2024 (up from $16.3M in Q2 2023) and $53.1M for the first half (up from $28.0M in 2023).

• Adjusted net income (excluding unrealized gains, ERC, and other non-recurring items) was $15.6M for Q2 2024 and $31.0M for the first half.

• The company recognized $9.4M in Employee Retention Credit (ERC) as government stimulus income in Q2 2024.

• Acquisition of the White Oak Senior Living portfolio for $221.4M closed August 1, 2024, expanding operations in the Carolinas.

Financial highlights

• Net patient revenues increased 3.8% year-over-year in Q2 2024 and 7.2% for the first half of 2024.

• Other revenues declined 13.0% in Q2 and 7.7% for the first half, mainly due to lower management and insurance service fees.

• Total costs and expenses rose 3.5% in Q2 and 6.0% for the first half, with salaries, wages, and benefits as a percentage of revenues declining to 59.9% in Q2 (from 62.0%).

• Agency nurse staffing expense decreased 57% in Q2 and 54% for the first half, reflecting successful cost control.

• Diluted EPS was $1.73 for Q2 2024 and $3.42 for the first half; adjusted diluted EPS was $1.00 for Q2 and $2.00 for the first half.

• Cash and equivalents at June 30, 2024 were $136.2M, up from $107.1M at year-end.

Outlook and guidance

• New $200M unsecured credit facility established August 1, 2024, to support growth and liquidity.

• Management expects continued benefit from higher per diem rates and occupancy, with ongoing focus on reducing agency staffing costs.

• Anticipates revenue increases from state Medicaid rate adjustments in Tennessee, South Carolina, and Missouri for FY2025.